With sales increases averaging 12% per supplier, 1999's first half looked good compared to that of 1998 for industrial control companies. Profit comparisons were mixed, with instruments down about 2%, though electrical products increased a whopping 89%.

This information was derived from Business Week magazine's Corporate Scoreboard, which gathers data from 900 companies and reports them in 24 industry categories. Some are further organized into subcategories, such as Electrical and Electronics industry, which has four subgroups, including Instruments and Electrical Products (shown here).

The scoreboard's All-Industry composite likewise posted a 9% sales increase and a 10% profit increase between the first half of 1998 and 1999. This was a reflection of the U.S. economy's overall health and its benefits for industry.

Scoreboard industries are divided here into suppliers and users. Profits for the users decreased 12% in the first half of 1999. This was a much steeper decline than occurred on the supplier side.

There wasn't as much of a sales decrease in 1999's first half, slightly less than 2%, compared to 1998's first half. However, these data don't bode well for suppliers because less sales and profits could mean fewer funds for expansion and capital equipment, including controls.

Better news occurred in the second quarter (2Q99), however, when profits for the scoreboard's 900 companies increased 28% overall. In addition, since consumers and businesses are spending more than ever, the U.S. industrial sector will likely catch up soon.

Corporations increased capital spending 8.5% in 1Q99 and 10.8% in 2Q99, but much of these funds went to computers and financial services. Again, the industrial sector is bound to follow suit.

Another good sign for 1999's second half are big gains in durable goods orders. Despite the Federal Reserve's recent rate hikes to prevent the nation's economy from overheating, durable goods orders took a huge jump after the Fed's second rate hike. This also followed a large increase in durable goods orders in 1999's first half. Manufacturers facing increased product demand have to expand capital equipment, which will likely mean increased purchases of industrial controls.

Though the ongoing migration of industrial control firms into larger conglomerates makes it harder to track individual performances, 1998 annual reports from nine companies also showed gradually increasing sales. Revenues for 1998 exceeded those in 1997 by about 5% on average, though firms experienced slight decreases. This was less than 1997's 13% increase over 1996.

Likewise, the firms' profits followed a similar but more dramatic trend. Their 1998 profits increased only 4% over the year before, though 1997's profits increased 46% over the prior year.

This all boils down to the fact that industrial controls sector performed pretty well, but not great, in 1998. Sales were a little better and profits were somewhat better. The mood of all the companies in their annual reports is that 1999 should be a much better year.